SBA 504 Loan Program

Grow Your Small Business with a SBA 504 Loan

Established by Congress in 1986, the SBA 504 Loan Program provides healthy, expanding businesses with long-term, below-market, fixed-rate financing for the acquisition of land and building, machinery and equipment, and construction and renovation.

Eligible Businesses

Any for-profit businesses—corporation, partnership or proprietorship—are eligible to apply. The business tangible net worth may not exceed $15 million and the net profit after tax may not exceed $5 million.

Ineligible Businesses

Not for profits

Speculative Developers

Insurance Companies

Gambling Concerns

Private Clubs that restrict membership

Maximum Amount of SBA Participation

Up to 40% of eligible cost, with a $5,000,000 maximum

Manufacturers and energy efficiency projects are eligible for up to $5,500,000

These projects enable unlimited access to SBA funding and the total project size is unlimited

Eligible Use of Funds

Purchase of land

Construction of building

Purchase of building

Modernization, renovation or improvement of building

Purchase of machinery or equipment with useful life of 10 years or more

Service centers (e.g., oil and lube, brake or transmission centers) with pits and in ground lifts

Sports arenas

Swimming pools

Tennis clubs

Theaters

Wineries

Sample Financing Breakdown for Special Purpose Projects

This breakdown would be for a project with total costs of $1 million

Entity

Loan Amount

Percent of Project

Term

Interest

Collateral

Private Lender

$500000

50%

10 years

Market

1st Mortgage

CDC/SBA

$350000

30%

20 years

Below Market/Fixed

2nd Mortgage

Business/Borrower

$150000

15%

n/a

n/a

n/a

Startup Businesses

The SBA defines startup businesses as those that have been in operation for less than two years. These businesses are eligible for SBA 504 loans; however, they require an additional 5% down payment. (Financing breakdown is same as table above)

Sample Financing Breakdown for Special Purpose Projects and Startup Businesses

This breakdown would be for a project with total costs of $1 million

Entity

Loan Amount

Percent of Project

Term

Interest

Collateral

Private Lender

$500000

50%

10 years

Market

1st Mortgage

CDC/SBA

$300000

30%

20 years

Below Market/Fixed

2nd Mortgage

Business/Borrower

$200000

20%

n/a

n/a

n/a

We look forward to working with you on SBA 504 financing opportunities.

About Alabama Small Business Capital

Alabama Small Business Capital (ASBC), a d/b/a of Florida Business Development Corporation, a Florida not for profit corporation, is a private, non-profit Certified Development Company established in 1989 to administer the Small Business Administration (SBA) 504 Loan Program. In addition to the 504 Loan Program, ASBC is active in the economic development in the community in which it serves.